Monday, November 2, 2015

Seriously both the Cruz and Rubio tax plans suck

Honestly, I don't usually care about candidate tax plans as I feel they are put together for the sake of being put together. Also, other than corporate tax reform, I don't put tax reform high on my list of priorities. The only issue I have with the individual tax system is that so many people end up not paying anything at all so then they don't care how much money we spend because they aren't paying for any of it, but "tax the lower 50%" is hardly a winning slogan.

So then why am I slamming the Cruz and Rubio tax plans? Am I just being a RINO stooge with a secret allegiance to JEB? Well in the case of Cruz, it's because I think it will eventually be a disaster which will lead to much higher taxation. When viewed separately, I actually like aspects of his plan. I like his flat tax which still allows a home interest deduction, as I don't think a flat tax without a home interest deduction is viable. Also, contrary to what many people say, the home interest deduction is not just a subsidy for the middle class as it was always a feature of the income tax, even when only the wealthiest paid it. I also like the idea of the fair tax as it incentivizes savings instead of consumption.

However, we know what would happen when you put both together, both tax rates can now be manipulated by Congress and we could end with high rates for both, just like Europe. That would make any sort of comfortable lifestyle out of reach for many Americans, other than the very rich. I would rather Cruz had come in with just a fair tax proposal as that would be one that would make much more sense and have the added benefit of getting the IRS completely out of people's lives.

I also think the Rubio plan doesn't make much sense either as it seems to help the poor and the rich but not the middle class so much as you can see by this chart.

In fact you are going to see some members of the middle class see their taxes go up under his plan. Right now the 35% tax bracket doesn't start until you hit $411,500 for both single and joint filers filers. Under the Rubio plan, it starts at $75,000 for singles and $150,000 for joint filers. So there will be people in the middle class completely screwed by this plan and those are the people who are usually screwed by government. We need to unscrew them, not screw them more.